THE past couple of years have left many people staring in disbelief at the returns on their individual retirement accounts. Consider last year, when the Standard & Poor’s 500-stock index finished the year essentially where it started.

So it makes sense that people are looking for ways to earn more for retirement — or to make up for losses. Yet when I heard that an increasing number of people were moving money from traditional I.R.A.’s to self-directed I.R.A.’s that focused on real estate, I was skeptical that this was a good idea.

First, I wondered, how could this be done with retirement money? Was it even legal? And were people who had worked and saved money for their retirement really putting it into real estate so soon after the bubble burst?

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It turns out there is nothing illegal about using a self-directed account to buy real estate or many other things, for that matter. But this does not mean it is easy. There are dozens of caveats on how to do it, and the specter of running afoul of the Internal Revenue Service looms large. (And to be clear, this is still a niche, with only about 2 percent of the $4.8 trillion in I.R.A.’s in self-directed accounts, according to Equity Trust, one of the big players in the industry.)

This week, a lawsuit was filed against two custodians of self-directed I.R.A.’s, the Equity Trust Company and the Entrust Group, accusing them of failing to do due diligence on investments, even though that is something that custodians do not do.

Still, the investors I spoke with were not starry-eyed evangelists, but pragmatists trying to find an investment that they hoped would appreciate but would certainly provide income from rents.

“I got the year-end statement for my I.R.A. and it was within $2,000 of where it was the year before,” said Mark Rusnak, a real estate agent in Virginia Beach. “I thought there has to be a better place to put my money.”

He moved money into a self-directed I.R.A. bought a house this year for $80,000 cash and spent $23,000 more fixing it up. He said it was assessed for $147,000, but he was happier with the $13,200 in yearly rent — a 13 percent return on his money.

This makes sense, but how many people are willing to bet that real estate will provide a comfortable retirement, especially since the value of their own homes has not yet recovered? Here is a look at what some investors who have become comfortable with this niche are doing.

WHAT The most common kinds of real estate in self-directed I.R.A.’s are apartments and multifamily homes. That should be no surprise. They can easily be rented out.